UK Conservative leader David Cameron says: “Yes, I am a Zionist.”

DEBKAfile - We start where the media stop

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UK Conservative leader David Cameron says: “Yes, I am a Zionist.”

June 17, 2007, 3:26 PM (GMT+02:00)

In an question-answer session at the Conservative Friends of Israel, Cameron said: “If what you mean by Zionist, someone who believes that the Jews have a right to a homeland in Israel and a right to their country then yes, I am a Zionist and I’m proud of the fact that Conservative politicians down the ages have played a huge role in helping to bring this about.”

The Conservative went on to say: There is something deep in our party’s DNA that believes in Israel, the right of Israel to exist, the right of Israel to defend itself and that a deal should only happen if it means that Israel is really allowed to have peace within secure borders and real guarantees about its future.”

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Syrian and Iranian Generals in Intensive War Consultations

DEBKAfile - We start where the media stop

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Syrian and Iranian Generals in Intensive War Consultations

June 9, 2007, 12:07 PM (GMT+02:00)

	Syria and Iran march together

DEBKAfile’s intelligence and Middle East sources take a look at the actions behind the words issuing from Damascus officials affirming Syria’s willingness to go into peace talks with Israel.

During most of last week, two high-ranking Iranian delegations spent time in Damascus. One was composed of generals who held talks with Syrian leaders on coordinated preparations for a Middle East war in the coming months.

At the Iranian end, a similar high-ranking Syrian military delegation called in at Iranian army and Revolutionary Guards headquarters to tighten operational coordination between them at the command level, as well as inspecting the Iranian arsenal. The Syrian general staff will draw up a list of items it is short of for a possible military confrontation with Israel this summer.

Our sources report that last week, Tehran sent Moscow a check for $327 m to pay for assorted missiles consigned to Damascus. A further $438 m has been pledged by the end of June for more hardware to Syria.

Iranian foreign minister Manouchehr Mottaki’s three days of talks in Damascus at the end of May further consolidated the strategic partnership between the two governments under the mutual defense pact they signed a year ago.

Their deliberations produced concurrence on the following issues:

1. Expanded economic cooperation, i.e. an enlarged Iranian aid package for Syria including monetary assistance and an extra 5 million tons of oil gratis per annum on top of the one million already guaranteed.

Syrian president Bashar Assad drove a hard bargain: He demanded a larger slice of economic aid as the price for entering into strategic cooperation with Iran for the coming war.

2. The Assad government agreed not to take any military - or other steps with military connotations - without prior notice to Tehran and its assent. This clause applies equally to activating the Lebanese Hizballah and the Palestinian Hamas’ Damascus headquarters.

3. Reciprocal visits by Syrian and Iranian generals and political officials will be stepped up.

4. In Iraq, Iran and Syria agreed to jointly intensify their terrorist operations against US and British troops.

The regime heads in Tehran are basing their common front with Damascus on intelligence reports whereby the US and Israel have drawn up plans for coordinated military action against Iran, Syria and Hizballah in the summer.

According to this hypothesis, Iranian leaders foresee the next UN Security Council in New York at the end of June or early July ending with an American announcement that the sanctions against Tehran are inadequate because Russia and China has toned them down. Therefore, the military option is the only one left on the table. The ayatollahs have concluded that US president George W. Bush is determined to bow out of office on the high note of a glittering military success against Iran to eclipse his failures in Iraq.

They believe he will not risk the lives of more Americans by mounting a ground operation, but rather unleash a broad missile assault that will wipe out Iran’s nuclear facilities and seriously cripple its economic infrastructure.

According to the Iranian scenario, the timeline for hostilities has already been fixed between Washington and Jerusalem - and so has the plan of action. The US will strike Iran first, after which Israel will use the opportunity to go for Syria, targeting its air force, missile bases and deployments, as well as Hizballah’s missile and weapons stocks which Iran replenished this year.

Officials in Tehran and Damascus find confirmation of their intelligence evaluations in the visit Israel’s transport minister Shaul Mofaz paid to Washington last week at the head of a large military delegation. They are certain Mofaz, a former defense minister and chief of staff, used the strategic talks to tie the last ends of the planned offensive. They were perturbed in particular by the Israel minister’s reported advice to secretary of state Condoleezza Rice of the importance of setting a deadline, beyond which the US will abandon sanctions as ineffective and turn to its remaining options for dealing with Iran’s advance towards a nuclear weapons capability.

Considering the climate in Damascus and Tehran and their active pursuit of preparations for imminent attack, it is not surprising that Israeli prime minister Ehud Olmert received no reply to the note he sent to Assad proposing peace talks and offering the Golan as an incentive. Assad was not inclined to take the Israeli prime minister seriously. According to DEBKAfile’s sources in Jerusalem, Olmert did not really expect him to. The offer was more in the nature of clearing the decks ahead of Olmert’s White House visit later this month.

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Copyright 2000-2007 DEBKAfile. All Rights Reserved.

Moscow Releases Nuclear Fuel for Iran’s Bushehr Reactor

Moscow Releases Nuclear Fuel for Iran’s Bushehr Reactor

From DEBKA-Net-Weekly Updated by DEBKAfile

June 12, 2007, 1:12 PM (GMT+02:00)

	Iran's Bushehr atomic reactor can start rolling with Russian fuel

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Russian president Vladimir Putin put teeth in his threats and his cynically helpful alternative suggestions regarding the deployment of US missile defenses in Poland and the Czech Republic.

DEBKA-Net-Weekly 304 disclosed on June 8 that the week before the G8 opened in Germany, Moscow released the long-withheld nuclear fuel for Iran’s atomic reactor in Bushehr. It was delivered 24 hours before Israel launched its new military imaging satellite Ofeq-7, bringing forward the Iranian threat to Israel, according to DEBKAfile’s military sources. One immediate result has been the stiffening of Tehran’s negative posture, sparking what nuclear watchdog director Mohammed ElBaradei called Monday, June 11, a confrontation that needs to be urgently defused.

As DEBKA-Net-Weekly reported, special nuclear containers were loaded on a train in the yard of the manufacturers JSC Novosibirsk Chemical Concentrates Plant on June 2-3. They contained two types of nuclear fuel, WER-440 and WER-1000.

The special train then headed out of Novosibirsk to Astrakhan on the Caspian Sea, 2,000 km away. There, the containers awaited loading aboard a Russian ship destined for Bandar Anzili, the Iranian military port on the Caspian shore. According to our Iranian sources, a fleet of Iranian trucks was waiting at the other end outside Bandar Anzili port to transport the nuclear fuel and drive it slowly and carefully to Bushehr, a distance of 850km, arriving June 10 or 11.

But DEBKAfile’s sources added the journey was interrupted by holdups ordered by the Kremlin in an episode which also laid bare the interdependence of Iran’s nuclear industry and Tehran’s program for arming Syria for war with Israel with the latest Russian munitions.

Arguments over payments due from Tehran have dogged relations with Moscow before and Putin is far from trusting.

A few days before the nuclear fuel left the Siberian factory, Tehran delivered the sum of $327m for a fresh delivery of Russian missiles to Syria. Iran pledged another $438m for further arms consignments before the fuel cargo was allowed to go forward. Putin then ordered the cargo to be loaded at Astrakhan, but await delivery in port until payment was made.

DEBKAfile picks up the story Tuesday, June 12, and reports that Iran duly deposited the money and the ship was permitted to set sail and cross the Caspian Sea to Iran.

DEBKA-Net-Weekly went on to report that Putin never promised Bush that Russia would deny Iran the nuclear fuel for its Bushehr reactor in perpetuity, as some administration circles in Washington have claimed in the last two years. He did assure Washington, mainly in conversations with US Secretary of State Condoleezza Rice, that he would postpone delivery as long as he could, despite Moscow’s contractual commitments to Tehran.

The Bush administration’s plan to deploy missiles in East Europe made the Russian president mad enough to set this assurance aside.

His move hits the US where it hurts most: The UN Security Council meets at the end of June to approve harsher sanctions against Iran for continuing to enrich uranium in defiance of previous resolutions. The Russian fuel delivery will substantially dilute the effect of such penalties, especially when the Islamic Republic is about to clinch a deal for the acquisition of long-range ballistic missiles from North Korea (as DEBKA-Net-Weekly 300 revealed on May 11).

Putin developed a complex and well thought out retaliation strategy for America’s missile deployment in East Europe.

1. A second consignment of nuclear fuel went out to India from the same Russian factory which supplied Bushehr. This was a swipe by Putin at US-Indian nuclear cooperation which it is also under attack in the US Congress. It was also meant to place Moscow at dead center of the Russian-American-Israeli contest over domination of the Indian arms market. This contest also pertains to the developing military ties between New Delhi and Tehran, which Moscow is working hard to turn to its benefit. The Kremliln has not said the last word on this contest.

2. Monday, June 4, the Russian president sent the director of the Russian Nuclear Energy Commission, Sergei Kirienko, to the Russian Interfax news agency with an announcement: “I have just visited the Novosibirsk Chemical Concentrates Plant; fuel for Iran and India is ready,” he said. “It will be delivered six months before the physical launch.”

This statement has granted the Russian president six months’ leeway for jumping whichever way he finds expedient.

It is time enough for Moscow and Washington to reach terms on the Iran issue as well as the East Europe missile deployments. If the Bush administration digs its heels in on the missile defense shield, Russian engineers employed at Bushehr will be told to go ahead and activate the reactor even before December 2007. But if Washington relents, Russian personnel can always be told to go back to dragging their feet, as Moscow did on the nuclear fuel.

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Anatomy of a Chinese Bubble: A Checklist For Spotting Bubble Tops

Anatomy of a Chinese Bubble: A Checklist For Spotting Bubble Tops

Posted on Jun 1st, 2007 with stocks: CHINA, CHL, FXI, GSH, LFC, PGJ, PTR, QQQQ, SNP

Spongebob: Patrick, check it out!
Patrick: Wow!
Sponge & Pat: Hooray! Bubble party!
Thug: Hey! Who blew this bubble? You all know the rules!
Thugs [in unison]: All bubble-blowing babies will be beaten senseless by every able-bodied patron in the bar

It's almost impossible to call the end of a stock bubble but there are several key indicators that investors should monitor when trying to time an exit from a bubble.

Use this handy-dandy check list next time you think you see a price bubble forming and want to call a top. I'm going to look at the most over-exhuberant market, the Shanghai Composite Index [DJSH] to see if the recent 180% run is getting a bit "extended."

It's almost impossible to call the end of a stock bubble but there are several key indicators that investors should monitor when trying to time an exit from a bubble.

Use this handy-dandy check list next time you think you see a price bubble forming and want to call a top. I'm going to look at the most over-exhuberant market, the Shanghai Composite Index [DJSH] to see if the recent 180% run is getting a bit "extended."

1. Parabolic Price Increase

This one's pretty obvious since parabolic price increases are the definition of a bubble. We've had so many examples of bubbles now that it's getting pretty easy to spot the crazy price action that marks the final phases of a stock bubble advance. And all bubbles should be compared to the granddaddy of all bubbles - the NASDAQ from 1998 to 2000. The Shanghai's parabolic advance looks very similar to the Big Nasdaq.

Amazingly, the current advance in Shanghai makes the NASDAQ blow off look tame. Since the beginning of the move in 2005, the Shanghai has advanced 335% vs the 1998 - 2000 advance of the NASDAQ of 277%. The final acceleration higher in the NASDAQ from October 1999 to March 2000 went up 87%. The current blow off in Shanghai from September to today has registered a 180% increase. The current parabolic move in China is truly historic because at the time, the NASDAQ bubble had been the biggest bubble move ever.

Here's the three year chart of the Shanghai composite...

click to enlarge

...versus the NASDAQ composite from 1998 to 2000.

2. Strong Indexes Mask Underlying Weakness

During the final stages of a bubble blow off, most stocks have already peaked out and are beginning to head down. Here's a snapshot of some of the leading Internet stocks from 1999 to 2000. You'll notice that none of them were hitting new highs with the NASDAQ in March 2000.

Here's a snapshot of some leading China stocks right now...

3. Valuations Are Off The Charts

In 2000, Cisco traded at 180x trailing earnings and 40x sales. Amazon traded at 100x sales and had no earnings. Ebay traded at 1000x sales and had no earnings. In the Tokyo real estate bubble in the late 1980s, prime real estate went for as much as $100,000 a square foot. Now that's a bubble valuation.

In comparison, many China stocks look down right cheap. While a couple of outliers like China Life (LFC) and Guangshen Railway (GSH) trade at well above average multiples and are approaching bubble valuations, many China stocks are simply trading at slight premiums to their industries.

China Life and Guangshen Railway look expensive...

...but China Mobile (CHL), China Petroleum (SNP) and others are trading in line with their industry multiples despite the huge stock price advance.

The overall Shanghai market is trading at about 43x earnings, which, while expensive, isn't at the highest level ever.

The price to sales ratio shows a similar pattern.

4. Retail Investors Are All-In

In 1929, retail investors flocked to bucket shops to trade $200 of stock on $1 margin during their lunch hour.

In 1999, lawyers and doctors quit their jobs to trade stocks at day trading firms.

In 2007, Chinese are quitting their jobs to trade stocks. Over 27 million brokerage accounts have been opened in 2006, bringing the total to well over 100 million.

From Chinadaily.com...

Xiao Feng, a former investment consultant at a futures company in Nanjing, put his three apartments and two vehicles - worth 5 million yuan - up as collateral days ago to get a 10 million yuan loan to invest in the stock market.

But the cost of borrowing is high - with an annual interest rate of 25 percent, he'll have to pay the lender 2.5 million yuan in interest at the end of the year, reported the Nanjing Morning Post on Wednesday.

In addition, the lender will monitor his stock trading account. If the value of Xiao's portfolio drops below 8 million yuan, the lender will liquidate his stock holdings to prevent a further decrease in the principal, spelling a loss of two million for Xiao.

When the 2.5-million interest payment is also taken into account, Xiao Feng will lose what he has worked for in the past 10 years - all his collateral.

Then why take such a risk? "Maybe it is the lure of the stock market. If an investment in a stock triples, or quadruples in a short period, then why not try?" he replied.

No wonder the Chinese government is so concerned. The road to capitalism will get much more bumpy if people actually start getting a sense of risk and lose money. It will be an in vitiation for more, not less, government intervention - if that's even possible in a communist country.

So, three out of four on the Bubble Top Checklist are definitely confirmed, and one is not. That's probably close enough to call for a significant "correction". Soon, I'll take a look at how US investors might be able to make some money off of the China stock bubble "correction".

Wally The Block Mover